The Big Short Part 1: Question Preview (ID: 7299)

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Which of the following statements is not true...
a) Steve Eisman predicted the the subprime mortgage catastrophe.
b) Meredith Whitney claimed that all Wallstreet bankers were corrupt.
c) Many investors claimed to have predicted the subprime mortgage catastrophe.
d) Meredith Whitney was trained by Steve Eisman

Aames Financial belonged to a new category of firms that
a) extended mortgages to mainly the affluent members of society
b) had no real significance
c) helped large firms manage their businesses
d) extended loans to cash-strapped americans

Eisman placed a sell-rating on the company Lomas Financial Corporation. A sell-rating means...
a) the analyst expects the stock to perform in line with the expected returns of the market.
b) the analyst has identified major problems that exist at a company.
c) the stock is expected to perform better than the market
d) none of the above

Which of the following was not used to describe Eisman?
a) sincerely rude
b) protective of women
c) intensely suspicious
d) a born teacher

Eisman walked onto Wallstreet at the very beginning of a curious phase when the mortgage bond market found its fuel...
a) in the debts of major insurance companies
b) in the debts Americans with extremely low credit scores
c) in the debts of the least credit worthy Americans
d) all of the above

Mortgage bonds are...
a) a single giant loan for an explicit fixed term
b) cash flows from a pool of thousands of individual home mortgages
c) very similar to old-fashioned government bonds
d) rarely problematic

Mortgage borrowers typically repaid their loans when interest rates were...
a) rising.
b) decreasing
c) steady
d) none of the above

Which of the following statements is false?
a) In the 1980s, mortgage bond investors feared being paid back too quickly.
b) They were used to extend credit to less and less creditworthy homeowners.
c) Freddie Mae and Ginnie Mae were the two government agencies that set credit quality of borrowers.
d) Mortgage bonds were used to make loans that did not qualify for government guarantees.

The subprime lending industry...
a) attracted sleazy people.
b) was a fast-buck business.
c) was fragmented
d) all of the above.

Early on in his career, Elliot Eisman...
a) refused to see the sense in subprime lending.
b) worked for one of the leading banks of the subprime lending industry.
c) wrote for the financial column of the New York Times.
d) worked as a junior accountant in Manhattan.

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